IDEAs organised a workshop on “Macro Economic Constraints and Policy Alternatives in Developing Countries”at Muttukadu, Chennai, India from 23rd January to 26th January, 2006. The workshop was based on a heterodox perspective consisting of a series of lectures followed by open discussions on the impact of international trade and financial liberalization on macroeconomic policies at country levels, especially in the developing world. The lectures included both theoretical as well as empirical analyses of the resultant situations in developing economies and explored alternative future policy paradigms for resolving macroeconomic crises posed by the forces of liberalization. The programme covered impact on specific sectors and used case studies to illustrate and analyse the current scenario.

The workshop venue had over 30 trainees (either completed their PhD or at the verge of completing it) from South Asia, Africa, Latin America and South East Asia. The participants were provided full funding for travel along with complete boarding and lodging to attend the workshop. While screening the applicants, special emphasis was given to those from the low income developing countries and they were also given preferential treatment with regard to funds. The total work time of the workshop was 24 hours over a period of four days.

The trainees were given lectures with discussion on the following topics:

Macroeconomic Analysis when Holding Gains are Properly Identified by Dr. Alex Izurieta, Research Fellow, Cambridge Endowment for Research in Finance, Judge Business School, University of Cambridge, London.

Some Contradictions in the World Economy by Professor Prabhat Patnaik, Jawaharlal Nehru University, New Delhi.

Economic Reforms in China by Cui Zhiyuan, School of Public Policy and Management, Tsinghua University, Beijing.

Changes in the Distribution of Income over the Last Two Decades:extent, sources and possible causes by Professor Giovanni Andrea Cornia, University of Florence, Florence.

Professor C.P. Chandrasekhar lectured on the high current account deficit faced by the United States for the last one and a half decade and the serious implications it had has on the global macroeconomic imbalances. He concluded that the specific trade-related factors cannot explain either the magnitude of the U.S. current account imbalance or its recent sharp rise. Rather, the U.S. trade balance has been passively determined by foreign and domestic incomes, asset prices, interest rates, and exchange rates, which are themselves the products of more fundamental driving forces. Dr. Alex Izurieta also showed great concern for the high US Current account deficit. He argued that the present US economy relies largely on large capital inflows, but the concentration of investment in the highest-income regions of the world is socially damaging, destabilizing and prejudicial to the effective development of resources in the world as a whole. He concluded that the US deficit can be contained in a less damaging manner only if the rest of the world contains its own surpluses and boosts investment in other regions. A couple of things in his lecture attracted the trainees: a) the introduction of the concept of holding gains and b) the running of iteration programmes to explain how simple they were.

Professor Jayati Ghosh gave a very stimulating lecture on the aspect of trade not being able to generate employment in the economy. Her lecture was a perfect blend of immense empirical research and profound theoretical concepts. She brought some gender perspectives into the macroeconomic issues arguing that women continue to be disproportionately engaged in low-wage, low-productivity and part-time jobs. Professor Yilmaz Akyuz took up quite a different topic in his lecture regarding management of capital inflows, especially arguing the serious effects that capital inflows have on the developing world. He emphasized that in the current political environment, the maximal feasible strategy for developing countries in their search for greater financial stability would be to try to combine national control over capital flows with some internationally-agreed arrangements for debt standstills and lending into arrears, while strengthening their financial systems through better standards, and effective prudential regulations and supervision.

Professor E. Yeldan spoke about the changing global scenario with the aggressive infiltration of the ideas of neo-liberal economics, which led to an undermining of the development through state interventions. He drew an alternative policy framework as elements of a more socially relevant programme, where he emphasised that domestic development objectives have to be elevated over the strategic interests of finance capital. Professor Prabhat Patnaik strengthened the ideas on the concern over the US current account deficit, previously put forward by Prof. C.P. Chandrasekhar and Dr. Alex Izurieta, and also provided a sound theoretical analysis of the issue. His lecture became quite intersting and special in a way that his arguments were based on the historical and political events of the globe and the effects it has on the development prospects of the third world.

The lecture of Professor Chui Zhuiyan anchored around the development process of China and provided a detailed case-study of the Chinese economy. The lecture even provided a comparative study of the Indo-Chinese economy, which in the recent period has drawn a lot of attention in the media, as well as the academia. He enlightened the trainees when he proposed a new concept of Beijing Consensus, in opposition to the Washington consensus, based on innovation (or experiment), equity and asymmetric defense strategy. In Professor A.G. Cornia’s lecture, he elaborately discussed the significance of inequality in the global economy and empirically established the fact that especially in the policy regime of liberalization and globalization, this inequality tends to rise across and within the borders. This discussion assumed huge importance since, in the recent periods, policy makers neglect inequality as a policy issue.

In an effort to improve its future performances, IDEAs requested the participants to fill up a questionnaire (feedback forms), which detailed the performance of each lecturer and in the end to provide some valuable suggestions. In their response, some participants suggested that a greater stress on differences in the development experiences of the different countries, for instance a greater stress on the unfolding of the development process in Africa as distinct from that of Asia would have been more useful. It was felt that Africa was somewhat under represented in the discussions and country studies. Overall, the participants were quite satisfied with the way the workshop was unfolded and agreed that it was a good learning experience for them.